Issuance of Single Show Cause Notice Covering Multiple Financial YearsValidity ofPrayag Narain

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The Tax Publishers GST--Show Cause Notice Issuance of Single Show Cause Notice Covering Multiple Financial Years--Validity of Prayag Narain The learned author seeks to examine the issue as to whether issuance of single show cause notice covering multiple financial years, is sustainable in law. The related issue is being discussed in the light of relevant statutory provisions and a recent Karnataka High Court decision in the case of Veremax Technologie Services Ltd. v. Asstt. CCT 2024 TaxPub(GST) 2783 (Karn-HC). 1. Introduction Under the GST law, there are specific provisions specifying limitation periods for issuance of show cause notices and passing of adjudication orders under section 73 as well as section 74 of the Central Goods and Services Tax Act, 2017 (in short "the CGST Act"). The limitation period for issuance of show cause notice is linked with the passing of the adjudication order and the limitation period for passing of adjudication order is linked to the due date of furnishing of annual return for a financial year. It is thus clear that a show cause notice can be issued for a single financial year only as the limitation period for issuance of such notice would be reckoned from the due date of furnishing of annual return for that financial year. However, the departmental officers as of now have been issuing single show cause notice covering multiple financial years. In such cases, it may happen that the limitation period for issuance of notice might have expired for a particular financial year covered by the such notice. This practice of issuing a single show cause notice for multiple assessment years under the GST framework has raised concerns before the courts. While the GST department finds it convenient to combine multiple years in one SCN, the same can lead to legal and procedural difficulties for both the department and taxpayers, as there may be breach of limitation period for any financial year. The taxpayers may challenge validity of entire show cause notice on the ground of limitation period. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

GST--Show Cause Notice

Issuance of Single Show Cause Notice Covering Multiple Financial Years--Validity of

Prayag Narain

The learned author seeks to examine the issue as to whether issuance of single show cause notice covering multiple financial years, is sustainable in law. The related issue is being discussed in the light of relevant statutory provisions and a recent Karnataka High Court decision in the case of Veremax Technologie Services Ltd. v. Asstt. CCT 2024 TaxPub(GST) 2783 (Karn-HC).

1. Introduction

Under the GST law, there are specific provisions specifying limitation periods for issuance of show cause notices and passing of adjudication orders under section 73 as well as section 74 of the Central Goods and Services Tax Act, 2017 (in short "the CGST Act"). The limitation period for issuance of show cause notice is linked with the passing of the adjudication order and the limitation period for passing of adjudication order is linked to the due date of furnishing of annual return for a financial year.

It is thus clear that a show cause notice can be issued for a single financial year only as the limitation period for issuance of such notice would be reckoned from the due date of furnishing of annual return for that financial year.

However, the departmental officers as of now have been issuing single show cause notice covering multiple financial years. In such cases, it may happen that the limitation period for issuance of notice might have expired for a particular financial year covered by the such notice. This practice of issuing a single show cause notice for multiple assessment years under the GST framework has raised concerns before the courts. While the GST department finds it convenient to combine multiple years in one SCN, the same can lead to legal and procedural difficulties for both the department and taxpayers, as there may be breach of limitation period for any financial year. The taxpayers may challenge validity of entire show cause notice on the ground of limitation period.